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Parent of Retail Supplier To Acquire Energy Services Company

December 22, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

ONEnergy Inc., the parent of Sunwave Gas & Power, announced that it has entered into a letter of intent (LOI) with OZZ Electric Inc., which contemplates an acquisition of all of the common shares of OZZ in exchange for the issuance of common shares of a successor corporation to ONEnergy.

Completion of the transaction would result in a reverse takeover and change of business of ONEnergy Inc. under the policies of the TSX Venture Exchange

"OZZ Electric’s strong reputation and deep rooted customer relationships have become the foundation of their electrical contracting, PV solar and energy efficiency product offering. They will be an excellent fit with ONEnergy, making for a more diversified combined entity, which will broaden our geographic reach as we expand the business into select markets. This transformative transaction, under the proven leadership of Steven Muzzo, will add significant value for our shareholders," said Stephen Letwin, Chairman of ONEnergy.

"Access to the public market via ONEnergy, will allow OZZ to expedite both its North American growth strategy and desire to develop, engineer, construct and own renewable energy assets in both new construction and retrofit markets," said Steven Muzzo, Executive Chairman and Chief Executive Officer of OZZ.

OZZ is a diversified electrical contracting and energy services firm with a core competency in large-scale industrial, commercial & institutional and residential projects. OZZ also specializes in the engineering, procurement and construction of PV solar systems, and the design and construction of energy reduction services for the multi-residential and large non-residential markets.

The LOI will be followed by the negotiation of a definitive agreement setting forth the detailed terms of the transaction and containing the terms and conditions set out in the LOI and such other terms and conditions as are customary for transactions of the nature and magnitude contemplated in the LOI.

As part of the transaction, it is currently contemplated that ONEnergy will transfer, to a newly incorporated subsidiary (Newco), its business, including all of its assets and liabilities other than its loss carryforward tax attributes and the rights and obligations in respect of the litigation with certain of its former directors and officers (the Spin Out Business) in order to allow for the efficient combination of Newco and OZZ, while preserving any benefits of the tax attributes and litigation for the current ONEnergy shareholders. Newco will issue common shares to ONEnergy in exchange for the transfer of the Spin Out Business, and ONEnergy will distribute the common shares of Newco to the current shareholders of ONEnergy as a return of capital, dividend or a combination of the two. It is anticipated that as part of the transaction, Newco, which will hold the Spin Out Business, will complete a new listing application with the Exchange and will become a reporting issuer. ONEnergy will continue to hold only its loss carryforward tax attributes and the rights and obligations in respect of the litigation with certain of its former directors and officers and will be delisted from the Exchange. It is anticipated that the transaction will proceed through a share exchange by way of a plan of arrangement, amalgamation or other similar form of transaction and a change of business of ONEnergy into that of Newco and then the business of OZZ, with the corporate name of the resulting public entity (the "Resulting Issuer") being changed to "OZZ Energy and Infrastructure Inc." or such other name acceptable to OZZ and the applicable regulatory authorities. The transaction, if and when it is completed, will result in the shareholders of OZZ holding a majority of the outstanding common shares of the Resulting Issuer. Following the transaction, the current shareholders of ONEnergy will hold both ONEnergy common shares and Resulting Issuer common shares.

Specifically, the LOI contemplates that the Resulting Issuer will issue an aggregate of 150.0 million common shares to the shareholders of OZZ at a deemed price of $0.50 per Resulting Issuer share, resulting in an implied common equity purchase price of $75.0 million (all $ Canadian). As a result, at closing of the transaction, and prior to completion of the certain financing, the Resulting Issuer will own 100% of the shares of OZZ, at which time there will be 174.0 million common shares of the Resulting Issuer issued and outstanding of which the current shareholders of OZZ will hold an aggregate of 150.0 million shares, representing 86.2%, and the current shareholders of ONEnergy will hold an aggregate of 24.0 million common shares, representing approximately 13.8%. The LOI also contemplates that the board of directors of the Resulting Issuer will be comprised of nominees of OZZ and that Steven Muzzo of OZZ will become the Chief Executive Officer of the Resulting Issuer. Steven Muzzo, indirectly owns and controls OZZ through CSE Utility Management Inc. (CSE), which is a private corporation existing under the laws of Ontario and carries on business in Ontario.

On a fully diluted basis, OZZ is 75% beneficially owned and controlled by Steven Muzzo, the Executive Chairman and Chief Executive Officer of OZZ. The following financial information of OZZ is derived from its audited financial statements for the fiscal year ending December 31, 2015 which were prepared under Accounting Standards for Private Enterprises (ASPE). OZZ had total assets and liabilities of approximately $122.2 million and $85.9 million, respectively at December 31, 2015. OZZ’s revenue, EBITDA and net income for the fiscal year ending December 31, 2015 was $205.8 million, $16.4 million and $5.7 million respectively

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